IOTA (technology)

IOTA is an open-source distributed ledger and cryptocurrency designed for the Internet of things (IoT). It uses a directed acyclic graph to store transactions on its ledger, motivated by a potentially higher scalability over blockchain based distributed ledgers. IOTA does not use miners to validate transactions, instead, nodes that issue a new transaction on the network must approve two previous transactions. Transactions can therefore be issued without fees, facilitating microtransactions. The network currently achieves consensus through a coordinator node, operated by the IOTA Foundation. As the coordinator is a single point of failure, the network is currently centralized. IOTA has been criticized due to its unusual design, of which it is unclear whether it will work in practice. As a result, IOTA was rewritten from the ground up for a network update called Chrysalis, or IOTA 1.5, which launched on 28 April 2021. In this update, controversial decisions such as ternary encoding and quantum proof cryptography were left behind and replaced with established standards. A testnet for a follow-up update called Coordicide, or IOTA 2.0, was deployed in late 2020, with the aim of releasing a distributed network that no longer relies on the coordinator for consensus in 2021.